Thailand to focus on boosting consumption, liquidity: new finance minister

[BANGKOK] Thailand will focus on spurring domestic consumption and reopening an economy badly hit by the impact of the coronavirus crisis, the country's new finance ministry said on Monday.

South-east Asia's second-largest economy suffered its deepest contraction in 22 years in the second quarter as the pandemic hammered the key tourism sector and domestic activity.

The other main tasks include boosting liquidity, supporting tourism and accelerating public spending, Arkhom Termpittayapaisith told reporters on his first official day at work.

"The most urgent task is to boost liquidity for businesses affected by Covid-19 as the business sector accounts for 70 per cent of GDP (gross domestic product)," he said.

The government will continue to introduce measures to support domestic consumption, which makes up half of the economy, and tourism, Mr Arkhom said.

Later on Monday, the cabinet will consider planned tax breaks to increase spending, which is estimated to add 120 billion baht (S$5.22 billion) into the economy.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

The ministry will speed up government spending, which accounts for 20 per cent of GDP, including a delayed 400 billion baht budget earmarked for reviving the economy under a bigger one trillion baht borrowing plan, Mr Arkhom said.

Regarding a persistently strong baht, Mr Arkhom said it is "an unresolved problem" and the ministry will closely monitor.

"But the central bank will take care of it," he said, speaking after the baht hit a more than two-week high last week.

Longer-term measures will include reopening particularly to foreign tourists to help the economy to continue to expand next year, Mr Arkhom said.

"Although the situation looks better next year and there may be a vaccine, it will still take one or two years for restoring the Thai economy," he said.

However, if domestic spending, exports and tourism improve, this will reduce government borrowing, Mr Arkhom said.

REUTERS